Tuesday, April 05, 2016

"No Unsolicited Proposals" - What happens when there are no doors for smaller nonprofits to open

An
October 2015 opinion piece in the Chronicle of Philanthropy noted that 72% of
US charitable foundations do not accept unsolicited grant proposals, a
significant increase from just four years ago, when that number was 60% (“Let’s
Require All Big Foundations to Let More Nonprofits Apply for Grants,” by Pablo
Eisenberg, Chronicle of Philanthropy, October 20, 2015). The author goes on to
say that:

“Organizations
that are small to medium size as well as those that represent poor, minority,
and other grass-roots constituencies, pursue controversial causes and
activities, or lack influential connections or friends struggle to get
foundation support. This invitation-only system allows foundations to
perpetuate inequality in American society, and that’s why Congress, regulators,
and nonprofits must come together to force change... Foundations and their
wealthy benefactors receive enormous tax benefits that subsidize their
operations. Donors receive upfront deductions of 40 to 50 percent for their
gifts, while foundations are exempt from local and state taxes as well as from
taxes on their investment income. In exchange for these benefits, foundations
and donors have an obligation to the public to ensure that their philanthropy
is accessible to all nonprofits that want to apply for grants.”

As
someone who has helped nonprofits pursue foundation grants for two decades, let
me share with you how this looks from the nonprofit’s side:

********

The
nonprofit researches foundations that might be interested in its work.

The
nonprofit sees that the foundation does not accept unsolicited proposals and gives
up on the idea of reaching out to the foundation.

Unfortunately,
every foundation the nonprofit
identifies says that it does not accept unsolicited proposals. Lacking a robust
major gifts program (attaining five-figure, six-figure, or higher donations
from individuals) or other substantial funding streams, the nonprofit plods
along with an annual fundraising campaign, wondering how it will ever expand
its services to meet growing needs.

OR

The
nonprofit’s in-house fundraiser or fundraising consultant says “Don’t worry
about that ‘no unsolicited proposals’ thing – it just means that you have to
reach out to the foundation, tell them about our organization, and get it to
invite you to submit a proposal.”

A
debate ensues about whether or not they should reach out to a foundation
officer or the foundation’s board.

Because
nobody wants to make a “cold call,” some passing-the-buck takes place around
who should make the call.

The
fundraising consultant says that she can no longer make these outreach calls on
behalf of the nonprofit because she is not registered as a solicitor with
attorney general of the state in which the foundation is located, and the
foundation would rather hear directly from the nonprofit’s staff, anyway.

The
Executive Director of the foundation reviews the prospect research and makes a
call to the foundation’s executive director or a program officer.

The
Executive Director does not hear back.

The
Executive Director calls again a week later.

The
Executive Director does not hear back.

The
Executive Director sends a follow-up email a week later.

The
Executive Director receives a polite email from the foundation, saying the
foundation is not accepting unsolicited proposals, has spent out everything it
can spend for this year, is no longer funding XYZ....

OR

The
Executive Director does get a call back from the foundation. The conversation
goes fairly well, and the nonprofit is invited to submit a proposal. The
nonprofit spends 15-20 hours deciding what to apply for, compiling the proposal
and all of the required ancillary materials (budgets, audited financial
statements, board lists, and more) submitting the proposal, and following up –
all while other projects and priorities fall by the wayside. The proposal (a)
is rejected, (b) is moved to the next docket, which is happening in six months,
or (c) gets an “entry level” gift of 10% - 20% of the original ask.

********

Certainly,
there are scenarios that play out more happily than this, scenarios in which
the nonprofit and the foundation’s staff work collaboratively to present a
proposal to the foundation’s board that will be accepted at a level close or
equal to what was requested. This first gift will lead to a longer-term collaboration
between the nonprofit and the foundation, one in which both entities pursue
their visions and achieve their missions.

My
experience says that this dream scenario is becoming a less frequent reality.
As more and more nonprofits are established in the US (there now are more than
a million of them, according to the National Center for Charitable Statistics),
there is increasing competition for funds. I believe that there may simply be
too many nonprofits in the US, and some of these organizations that cannot
sustain themselves should probably close or merge. But I also have observed
that many substantial foundation gifts are made because somebody knew somebody
who opened a door. For those on the fringes, for those without connections, it
does not seem to be a level playing field.

Meanwhile,
smaller nonprofits are spinning their wheels, spending hours and hours
preparing for and pursuing grants that they are very unlikely to secure. Those
are hours that could be spent on more mission-driven activities.

I imagine that
the situation at foundations can be equally frustrating. When they accept
unsolicited proposals (and even when they do not), foundations can be inundated
with phone calls, letters, emails and more from nonprofits that do not meet
their giving guidelines, do not offer programs or services in which the
foundation’s board is interested, or simply do not have a chance of receiving a
grant. Distracted and overwhelmed by this, foundation officers cannot
adequately turn their attention to the business at hand – helping the board
make grant making decisions that advance the foundation’s mission. Furthermore,
many foundation grant officers also spend their time helping their current
grantees make other funding connections, run effective programs, and more. They
do not have the time or resources to address every unsolicited inquiry that
comes in.

And, of course,
there’s the Golden Rule: He who has the gold, rules. If a foundation knows that
they only want to support certain hand-picked projects, that is their
prerogative.

So
what is a foundation to do? What is a nonprofit to do?

Perhaps
there is a way to reach a middle ground. For example, mid-size to large foundations
could be required to accept unsolicited proposals, but they also could set
parameters, such as “you may only submit one unsolicited proposal over a three
year period.” That would force nonprofits to think carefully about those
submissions, lest they squander a good opportunity. But even if they accepted
those unsolicited proposals, I do not think they could be forced to fund them.

I don’t know
what the answer is, but from where I sit, after 20+ years of working with
nonprofits and foundations of all sizes and scopes, the philanthropic field and
the public interest are not well served by the current hamster wheel of a
system.

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